Step 3 is actually reasonably easy in 4e. There's actually a sidebar in the DMG about using the rules for a Wushu style game, where, whenever the mechanics say you teleport, you really just did a crazy fast martial arts running thing or performed some extreme feat of acrobatics. You can actually push that further and apply similar abstractions to the gear: what would be a fighter in full plate wielding a sword and a shield (high AC, low speed, d8 damage die, etc.) would simply be a character using a style that emphasizes those attributes, such that, in game, the character is dressed in a gi and unarmed, while mechanically identical. You can even have the magic using classes behave in much the same way, just replacing whatever kind of magic they're using with ki, while still having them be effective in combat because 4e allows you to use Int or Dex for your defenses (so a Wizard actually has a reasonably decent AC, even if it's lower than a fighter's because they're in cloth). Of course, 4e is pretty explicitly a game of team based combat. 1v1 doesn't really turn out well because only Strikers are really designed to not help their team (leaders are borked as *hell* in 1v1 because they have their healing and defenders are problematic because they're designed to protect allies, which means that a lot of their mechanics are wasted when there's no one to protect). If you're going for a 1v1 fighting tournament, 4e is definitely not the right system to use (unless explicitly say no to Leaders and tweak some of the other stuff).